The brokerage and trading services company Robinhood (NASDAQ: HOOD) recently went public.
So what happened?
If you were to guess what Robinhood shares did when trading was initialised, if you’re guessing based on historical IPO performances, you might be right. Shares trended down for the day, which dropped as much as 10%. To you and me, this might not be a shock anymore.
Surprisingly when looking at Robinhood’s financials, they actually managed to make a profit. Net income last year was $7.45 million on their net revenue of $959 million. Even though the margin is small, it’s better than nothing.
Shockingly in the first quarter of this year, Robinhood reported a loss of $1.4 billion because of the GameStop short squeeze and retail investor interest. This is proof that retail investors can make a lasting change on Wall Street, which previously wasn’t thought to be as feasible as it was. This may have shown financial institutions on Wall Street retail investors shouldn’t be messed around with.
The company was founded in 2013, Its goal is to offer a zero-commission trading platform to millions of investors, to effectively widen the opportunity for non-investors.
Fractional shares also make it incredibly easy for retail investors like us with limited capital to gain exposure to stocks with higher share prices. This was a problem for quite a long time, which really limited our opportunities for growing capital over time in investment opportunities out of our price range.
In fact, because of these features, it’s become a favourite brokerage service for many younger generations just beginning to invest. As of the first quarter of this year, 18 million retail clients with over $80 billion in combined customer assets invest through the Robinhood platform. This is just phenomenal, the ability to capture generational interest is compelling on its own, especially if this continues for a long time.
Robinhood also offers cryptocurrency, cash accounts, and options trading alongside their standard equity services. All of this combined has created an integrated ecosystem of financial services and applications which are easily accessible at any moment.
In the second quarter of this year, Robinhood estimates total clients will grow to 22.5 million users, reaching $100 billion in total assets. This growth will probably be because of the retail interest in Robinhood during the “meme stock” craze which may extend for quite some time as more people become introduced to investing.
Robinhood is planning to continue growing its customer base and offering services that benefit its clients financially. This is a part of the overall plan to continue their growth strategies and commitments to customers such as zero-commission fees and fractional trading.
Although it’s not entirely certain what Robinhood shares will at trade next, It is somewhat known that the company itself is focused on growing operations internally and externally, which should make shareholders excited for the long-term opportunities presented.
Overall, the opportunity with Robinhood is that they are pioneering the next generation of financial applications for new generations. This all has to do with easy-to-understand layouts, visually appealing designs, and competitive features which all add to the Robinhood brokerage experience. This should be an obvious sign that Robinhood may soon be a leader in the financial services industry, potentially carrying shares well past expectations over the long term.